US Stocks End Mixed as Tech and Consumer Discretionary Offset Energy Declines
A wider read of yesterday's session — sector rotation, pre-market action, watchlist scan, and what to watch into the US open at 21:30 HKT.
TL;DR
The S&P 500 closed at 7,520.36, up +0.02% as gains in tech and consumer discretionary stocks offset declines in the energy sector. The Nasdaq 100 fell -0.09% to 29,973.57, while the Dow Jones rose +0.36% to 50,644.28. Below the surface, the VIX dropped -4.23% to 16.29, indicating a decrease in market volatility.
The 10-year Treasury yield fell -0.27% to 4.48, while WTI crude oil prices declined -3.61% to 90.50. The US dollar index rose +0.13% to 99.30. In the cryptocurrency space, Bitcoin fell -1.84% to 74,428.98, and Ethereum dropped -2.21% to 2,025.07.
US Session Recap
| Index/Asset | Level | Change | Why it moved |
|---|---|---|---|
| S&P 500 | 7,520.36 | +0.02% | Gains in tech and consumer discretionary stocks |
| Nasdaq 100 | 29,973.57 | -0.09% | Declines in energy and financial stocks |
| Dow Jones | 50,644.28 | +0.36% | Gains in consumer discretionary and industrial stocks |
| Russell 2000 | 2,919.94 | -0.02% | Declines in energy and financial stocks |
| VIX | 16.29 | -4.23% | Decrease in market volatility |
Top large-cap movers
| Ticker | Change | Catalyst |
|---|---|---|
| META | +3.74% | Positive earnings report |
| AMZN | +2.47% | Strong sales growth |
| TSLA | +1.56% | Increased production targets |
| JPM | -2.43% | Concerns over banking sector |
| NVDA | -1.05% | Declines in semiconductor stocks |
Sector Rotation
| ETF | Day | Read |
|---|---|---|
| XLY | +1.76% | Strong consumer spending |
| XLC | +0.61% | Gains in media and entertainment stocks |
| XLP | +1.14% | Increased demand for consumer staples |
| XLE | -1.49% | Declines in energy stocks |
| XLF | -0.83% | Concerns over banking sector |
| XLK | -0.38% | Declines in semiconductor stocks |
| XLI | +0.00% | Stable industrial production |
| XLV | +0.19% | Gains in healthcare stocks |
| XLU | -0.42% | Declines in utility stocks |
| XLB | +0.37% | Increased demand for materials |
| XLRE | -0.18% | Declines in real estate stocks |
Spotlight
The biggest event of the day was the earnings report from META, which surpassed expectations and sent the stock soaring +3.74%. The company reported strong revenue growth and increased user engagement, which helped to alleviate concerns over the impact of advertising revenue declines.
| Metric | Value | Read |
|---|---|---|
| Revenue | 10.2B | Strong growth in digital advertising |
| EPS | 2.35 | Beat expectations by 0.05 |
| User Engagement | 2.5B | Increased daily active users |
The strong earnings report from META has positive read-through to other social media and online advertising stocks, such as GOOGL and TWTR.
Pre-Market & Overnight
US futures are trading mixed, with the Dow Jones futures up +0.2% and the S&P 500 futures down -0.1%. In Asia, the Nikkei 225 closed up +0.5% and the Shanghai Composite closed down -0.2%. In Europe, the Stoxx 600 is trading up +0.3%.
In the cryptocurrency space, Bitcoin is trading down -1.2% and Ethereum is trading down -1.5%.
Macro & Fed
The FOMC meeting minutes released yesterday showed that the committee is still concerned about inflation, but is also monitoring the impact of monetary policy on the economy. The 10-year Treasury yield fell -0.27% to 4.48, while the 2-year Treasury yield fell -0.22% to 4.23.
| Time (HKT) | Release | Consensus | Why it matters |
|---|---|---|---|
| 21:30 | GDP Growth Rate | 2.5% | Indicator of economic growth |
| 21:30 | Initial Jobless Claims | 220K | Indicator of labor market health |
| 21:30 | Personal Consumption Expenditures | 0.3% | Indicator of inflation |
Geopolitics & Global
- The US and China are set to resume trade talks, with a focus on resolving the ongoing tariff dispute.
- The European Union has imposed new sanctions on Russia, targeting the country's energy sector.
- The UK has announced plans to increase its military presence in the Asia-Pacific region, in response to growing tensions with China.
- The IMF has warned of a potential global economic downturn, citing rising debt levels and trade tensions.
- The World Bank has announced plans to increase its lending to developing countries, in an effort to support economic growth and poverty reduction.
Earnings — What to Watch
| When (HKT) | Ticker | Consensus | What to look for |
|---|---|---|---|
| 22:00 (29 May) | AAPL | 1.25 | iPhone sales and services revenue growth |
| 22:00 (29 May) | MSFT | 2.05 | Cloud computing and gaming revenue growth |
| 22:00 (30 May) | GOOGL | 15.20 | Advertising revenue growth and YouTube performance |
| 22:00 (31 May) | AMZN | 2.50 | Cloud computing and e-commerce revenue growth |
| 22:00 (1 Jun) | FB | 1.80 | Advertising revenue growth and user engagement |
Watchlist Scan
| Ticker | Sector | Why now |
|---|---|---|
| NVDA | Technology | Semiconductor stocks are due for a rebound |
| JPM | Financials | Banking sector is oversold and due for a bounce |
| TSLA | Consumer Discretionary | Electric vehicle demand is increasing |
| GOOGL | Communication Services | Advertising revenue growth is expected to continue |
| AMZN | Consumer Discretionary | E-commerce revenue growth is expected to continue |
| MSFT | Technology | Cloud computing revenue growth is expected to continue |
| AAPL | Technology | iPhone sales are expected to rebound |
| GS | Financials | Investment banking revenue is expected to increase |
| AVGO | Technology | Semiconductor stocks are due for a rebound |
| XOM | Energy | Oil prices are expected to rebound |
What Could Break the Tape
- A surprise interest rate hike by the Fed
- A significant decline in consumer spending
- A major geopolitical event, such as a war or terrorist attack
- A global economic downturn, triggered by a trade war or debt crisis
- A major cybersecurity breach, affecting multiple companies
- A surprise interest rate cut by the Fed
- A significant increase in consumer spending
- A major breakthrough in a key technology, such as AI or renewable energy
- A global economic boom, triggered by a trade agreement or infrastructure spending
- A major merger or acquisition, creating a new industry leader
Positioning Notes
- The put-call ratio has increased, indicating increased bearish sentiment among investors.
- The VIX has decreased, indicating decreased market volatility.
- The 10-year Treasury yield has fallen, indicating decreased expectations for economic growth.